Enterprise mobile storefronts struggle

Enterprise confessional: I was wrong about mobile apps stores. I wasn’t the only one. When Wired chimed in on enterprise mobile apps struggles in February, they noted a hyped-up report predicting $30 billion in the mobile application market globally by 2012. Many of us thought the uptake on mobile storefronts would be much faster. The enterprise clearly rejected that view. Why?

I packed a suitcase and found out. In the last year, Dennis Howlett and I shot 27 videos with SAP mobile startups, partners and customers. Then we headed to the Mobile World Congress in Barcelona, looking for signs of enterprise mobile life amidst the “Samsung-versus-Apple” consumer hyper-punditry. Then we survived Orlando for Inforum 2013, where we picked up more answers as to why enterprises haven’t (yet) embraced mobile storefronts.

I come into this with a heavy bias: I believe the customization of the on-premise code base has been a dangerous sinkhole for the enterprise. I saw apps ecosystems (mobile and cloud) as the way companies would easily procure industry-specific apps, thereby saving themselves from the costly chores of maintaining and upgrading an overgrown custom code base.

The diagnosis of the custom code problem still seems accurate, but what of this plug-and-play future? It turned out to be hooey I shouldn’t have hyped.

Why enterprise mobile storefronts have struggled

Not enough apps. Keynote mobile apps demos of can be scintillating, but when you log on to the enterprise storefront, the emperor scrambles for clothes. Too many of these storefronts are ghost towns. For customers in search of specialized apps, a quick search leads to a quick bounce.

Stinky and kludgy apps. Apps with too many screens and process complexity turn off the buyers.

Fears of cannibalization. Aspiring mobile startups (rightly) worry that larger enterprise vendors will poach their best app ideas before they can build market share.

The challenge of integrating UI design with ERP know-how. Most of the best mobile apps developers don’t know much about the enterprise and lack crucial vertical expertise.

The pervasive need for ‘last mile’ development. From the SAP mobile startups I’ve talked to, a common theme is the need to customize mobile requirements for customers. 80 percent out-of-the-box and 20 percent customized means that frictionless online purchasing is still a pipe dream.

Due to #5, the mobile storefront becomes a ‘try before you buy’ staging area, rather than a commercial hub like Amazon or iTunes where high volume transactions take place.

Clumsy and unresolved pricing models. Some enterprise consultancies are using mobile apps as loss leaders to sell higher margin consulting. To make a profit on the sale of mobile apps alone, industry-focused apps would need price points much higher than enterprise customers are comfortable paying, given their one buck per app consumer experience. Horizontal mobile apps also lack price appeal; many enterprise customers expect those apps to be included in base software subscriptions. When companies are willing to pay for a horizontal workflow app with thousands of users, they expect a classic enterprise price discount. Translation? Log out of the storefront and give your sales rep a good ol’ parlay.

Bad or incomplete platform stories. As customers move past their initial mobile rollouts, they are looking for platforms that make it easy to build and consume mobile apps. Most enterprise vendors are struggling with multiple acquisitions and platforms; they lack a simple build or buy mobile apps story.

Storefronts do not thrive in isolation from community. Most enterprise storefronts are disconnected from community discussions, open source projects, and other sticky activities that would give customers reasons to hang out in a mobile apps environment besides searching for a niche app and getting “no results found”.

Building enterprise mobile apps storefront is just plain tough. Have a look through CIO.com’s 10 Must Have Features of a Enterprise Mobile Store and tell me if that’s something you’d like to be responsible for building. Role-based access control and malware assaults are just the beginning.

After returning from Barcelona, I conducted an in-depth video discussion on the state of enterprise mobility with Bluefin’s John Appleby and mobility analyst Kevin Benedict. Things got interesting at the 13:13 mark when Appleby, who has been heavily involved with enterprise mobile projects, simply said, “The problem is, it’s hard.” He elaborated:

We’re where we were 4 years ago on this…there isn’t a panacea. Apps don’t work in the enterprise. I don’t think anybody has shown an app that is really reproducible. The best you can do is template…that’s because of the design of legacy ERPs. You look at the cloud vendors; they don’t have those woes. Salesforce, I think, has a pretty credible mobile app because their platform is simple and relatively less modified. Your average ERP customer has got thousands of modifications, (which means) low value productivity apps, and the cost of implementing them is very high.

Kevin, who is as optimistic about enterprise mobility as anyone you could ever meet in a conference meet-and-greet, added to John’s comments and singled out economies of scale:

I don’t see the economies of scale that will drive (enterprise mobile apps) to profitability. They end up being half service industry…it really is a service offering. They have to go in there with a lot of consultants every time, and it just doesn’t scale easily.

This is not a referendum on enterprise mobility, nor is it a verdict of failure. Gartner recently conducted a survey of 2,000 CIOs who cited mobile investments as the #2 item on their spending list for 2013. But where will those investments go? Perhaps not to apps store purchases – at least not this year.

We got an unexpected take on this from Infor’s Nick Borth, during a video we shot at Inforum 2013. Nick relayed the surprising information that their customers – of all sizes – are asking for the tools not only to buy apps, but to build them:

Show Notes

:34 Customers want to build their own mobile apps, while asking for enhancements to Infor’s

1:57 Focus is on giving developers the security and integration to relieve upfront headaches

3:52 Customers’ desire to build their own apps is more prevalent than previously thought

5:23 Infor looks to support HTML5 and Javascript before going a third native platform

Vendors are not going to give up on building enterprise storefronts because of this piece, nor should they. But we’re a third of the way into 2013, and our understanding of how enterprises will purchase and consume mobile apps still raises more questions than answers.

Disclosure: SAP is a diginomica partner at the time of writing. SAP is also a client of JDOD.com in which the author is a partner.